Debenhams could launch CVA as it flies in KPMG to explore restructure

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Debenhams could be the latest retailer to undergo a company voluntary agreement (CVA) as it flies in the help of accountancy firm KPMG to push forward a restructure.

The struggling retailer has enlisted the help of KPMG to explore a number of options to help it reduce costs and boost sales, following a torrid year for department stores.

Though a number of options are reportedly being tested, it is understood that Debenhams could undergo a CVA which if approved could see it shut a number of stores and significantly reduce rents on others.

Last month Debenhams announced that it was launching a redundancy consultation with hundreds of staff, expecting around 90 to face the axe across its fashion and home departments, stripping out layers of management.

At the beginning of the year Debenhams, which expects full year profits to drop from £50.3 million to between £35 million and £40 million, slashed 320 store management roles.

This year alone Debenhams has launched three profit warnings and has already launched a major cost cutting drive expected to save the retailer around £20 million a year.

“Like all companies, Debenhams frequently works with different advisors on various projects in the normal course of business,” it stated.

Mike Ashley, who owns nearly 30 per cent of Debenhams, is rumoured to be considering a takeover bid.

Following Ashley’s recent acquisition of the embattled department store House of Fraser, many have speculated Debenhams and House of Fraser could be merged by the retail mogul.

Despite these speculations giving Debenhams’ share prices a much needed boost, their value has divebombed a by two thirds since the start of the year.

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2 COMMENTS

  1. 2016 Debenhams Ireland went into Examinership, Irish equivelent of a CVA but undercontrol of the Courts, they exited the Examinership with all stores still trading having lost a significant number of staff.
    A CVA for the parent company could well see Debenhams Ireland, losing funding from its parent Company and having to close all Southern Irish branches.

  2. I dont want Ashley to buy Debenhams as it will still lead to huge job losses, he is not going to keep both these huge chaines open with stores so close together… I don’t think Mike Day will be interested in the whole lot either.

    A CVA might help if they get it but I feel they have way too many stores, ironically I think the same amount as HOF is enough (about 50) in major and minor cities with a few dotted between them in major towns.

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